NEW YORK (AP) -- A key gauge of future economic activity rose last month in what was seen an indication that the slumping U.S. economy may be ready for a rebound.

The Conference Board said Wednesday that its Index of Leading Economic Indicators rose 0.5 percent to 109.3 in May, moving higher for a second straight month and beating analysts' expectations of a 0.3 percent increase.

Higher stock prices and lower interest rates drove the index upward.

''This is telling you things are dismal now, but they're going to get better,'' said Hugh Johnson, chief investment officer at First Albany Corp. ''Investors couldn't give a hoot about where they are; they give a hoot about where they're going. You don't drive a car by looking through the rearview mirror.''